Medina and Fairchild
[2016] FCCA 2433
•20 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MEDINA & FAIRCHILD | [2016] FCCA 2433 |
| Catchwords: FAMILY LAW – Costs – order made for father to pay mother’s costs on an indemnity basis – Father’s interim application wholly unsuccessful – Mother’s costs excessive according to scale – Costs for Interim and Final issues intertwined therefore reduction in the amount claimed as determined by the court . |
| Legislation: Family Law Act 1975 (Cth) ss.117(1)-(2) |
| Cases cited: Colgate-Palmolive & Cussons Proprietary Limited (1993) 118 ALR 248; (1993) 46 FCR 225 Wicks & Smythe (No.2)[2007] FMCAfam 436 |
| Applicant: | MS MEDINA |
| Respondent: | MR FAIRCHILD |
| File Number: | SYC 6362 of 2007 |
| Judgment of: | Judge Henderson |
| Hearing date: | 25 May 2016 |
| Date of Last Submission: | 25 May 2016 |
| Delivered at: | Sydney |
| Delivered on: | 20 July 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Parker |
| Solicitors for the Applicant: | Swaab Attorneys |
| Counsel for the Respondent: | Ms Reeman |
| Solicitors for the Respondent: | Armstrong Legal |
ORDERS
The Mother’s indemnity costs of $15,000 is to be paid by the Father to the mother or as she may direct by 26 August 2016.
IT IS NOTED that publication of this judgment under the pseudonym Medina & Fairchild is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6362 of 2007
| MS MEDINA |
Applicant
And
| MR FAIRCHILD |
Respondent
REASONS FOR JUDGMENT
This is an application of a wife for her costs on an indemnity basis consequent upon my dismissal of her former husband’s interim application; that whilst in his mother’s care, his mother be ordered to attend or have the child, [X], attend his (sport omitted) matches, training and other matters relevant to (sport omitted) and, in the alternative, if the mother was not willing to do that, that the father would take the child to (sport omitted) training and other incidental matters relating to his (sport omitted) at times when [X] was living with his mother pursuant to the current orders.
I have read Ms Gillies of Counsel’s written submissions for the husband and I have heard Mr Parker’s oral submissions today in relation to the indemnity costs issue. He submitted that his client was not aware that that would be the mother’s application until he saw the mother’s case outline or submissions on costs and her financial statement and affidavit filed in support of the costs. That the husband had not had time to respond and I gave leave to make those oral submissions on the indemnity costs issue and the costs issue generally.
I have read the written submissions by Mr Livingstone of Counsel for the wife, the wife’s financial statement and her affidavit setting out the costs on an indemnity basis that she has incurred in defending this application. Costs were some $27,695.55. She is seeking some $22,000 be paid by the husband in relation to the interim application.
My first task in any costs application is to determine whether I ought to exercise my discretion under section 117(2) of the Act[1] to order costs as the usual order or the usual process in this court is each party bears their own costs. Going to the relevant matters under section 117(2), they are:
[1] Family Law Act 1975 (Cth) ss.117(1)-(2).
“(1) Subject to subsection (2)… each party to the proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order, if any, should be made, the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether the parties are in receipt of legal aid …”
That subsection is not a relevant consideration in this matter –
“(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to comply with previous orders
e) whether any party has been wholly unsuccessful in the proceedings
(f) whether any party has made an offer in writing”
That subsection is not relevant to this matter:
“Such other matters as the court considers relevant.”
The husband concedes he has sufficient funds to pay any costs orders made. Although he has not filed a financial statement and the wife may, in her own right, be seized of a jointly owned asset, her share being around the $670,000 mark. It could be not be denied by the husband that he has a superior financial capacity, both as to income and resources to the wife to pay any costs order.
However, while the wife’s capacity is far more limited than the husband’s, she is not a person without means. At the hearing it was submitted that the husband earned about $1.2 million per annum. He is highly successful and skilled at his occupation. The wife earns about four per cent of that income. This submission was not denied and he has conceded a capacity to pay.
Legal Aid is not relevant.
The conduct of the parties; I will deal with that issue later.
Subsection (d) is not relevant; there was no failure by the parties to comply with orders.
Subsection (e) is relevant for as I read the orders sought and those I made and despite Ms Gillies’ submission, the husband was wholly unsuccessful in his application. He failed in his attempt to have the wife take the child to (sport omitted) and training and the like whilst he was living with his mum and he failed in his application that if she did not do that, his permitted so to do. The husband was wholly unsuccessful.
No offers were made.
The conduct of the parties and subsection (g), such other matters as the Court considers relevant are the factors which have operated on my mind in this particular matter.
The husband’s conduct in the proceedings, as I read out onto the record in my interim hearing, was threatening, coercive and bullying of the wife. There were 11 threats of litigation made by the husband against the wife from 25 January 2016 to 23 April 2016. In reasons I said I do not understand threats to bring contravention proceedings against the wife if she was to greet [X] at the conclusion of an entry exam for (omitted) College or letters from solicitors threatening breach of orders if the wife delivered [Y] to a particular venue are appropriate. I read onto the record instances of what I regard as improper behaviour by the husband.
The reason I regard it as improper behaviour is the husband is a parent who, by final orders, has equal shared parental responsibility with the wife the other parent and I fail to see how this behaviour is an appropriate way to conduct yourself in circumstances when, the reality is we have two good parents and two excellent children.
There are no violence issues, there is no not drug taking or neglect by these parents which are matters I too frequently see. These are good people, excellent children. I read this behaviour onto the record to demonstrate to the husband’s, what I regarded as his poor conduct and attitude to the wife and his responsibility to parenthood.
The husband’s significant income and capacity to engage lawyers at his whim and whenever he wished to is a factor I considered relevant because the husband has used that capacity, that is, his significant wealth and financial capacity, to overbear on the mother on whom he is to share parental responsibility for his precious children.
Therefore, consistent with decisions such as Prantage & Prantage[2], Stephens & Stephens[3], Penfold & Penfold[4] and Kohan & Kohan[5]. I find there are reasons to depart from the usual rule that each party pay its own costs due to the husband being wholly unsuccessful in his application and what I regard as his overbearing and threatening behaviour to the mother of his children made all the more easier for him because of his significant wealth, income and earning capacity.
[2] Prantage & Prantage (2013) FamCAFC 105
[3] Stephens & Stephens [2010] FamCA 184
[4] Penfold v Penfold (1980) 144 CLR 311
[5] Kohan & Kohan (1993) FLC 92-340
The question clearly for me now is ought I depart from the usual order when I determine to make a costs order of scale or solicitor-client costs and should I, as the wife seeks, make an order for indemnity costs. There is voluminous case law in relation to this vexed issue and the starting point for this Court is the decision of Kohan & Kohan, and I followed Kohan & Kohan[6] in an unreported decision of mine of Wells v Sadtner.[7]
[6] Kohan & Kohan (1993) FLC 92-340
[7] Wicks & Smythe (No.2)[2007] FMCAfam 436
In Kohan the Full Court consisting of their Honours Strauss, Linden, Meyer and Bully JJ, found as follows:
“In an appropriate case the Court has discretion to order costs on an indemnity basis, and such costs may be ordered where they have been incurred under a cost agreement which departs from the usual scale of costs, and that is the case here.”
In this matter the wife has a cost agreement and her fees total $27,000 odd. This is a significant departure from the scale costs which might amount to five to six thousand dollars if applied the scale and to some seven thousand dollars with counsel’s fees.
However, their Honours go on to say:
“it is fundamental to the exercise of that discretion in the Court that the judge should not only understand that such an order is a very great departure from the normal standard but also that the judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each party.”
The Court further held in Kohan & Kohan that I should have regard to the degree to which a cost agreement departs from the established norm and that the financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis. Now, for the husband today to pay, if I am so minded, the sum of $22,000 would not cause him significant financial hardship as I see the evidence. It would cause the wife significant financial hardship if only the scale is ordered as I see the evidence.
Their Honours set out in Kohan & Kohan how I ought exercise this discretion to order indemnity cost orders, and they say
“the intent of section 117(1) and (2) is that in this Court costs should not follow the event as a matter of course. However, where the justice of the matter requires, the Court may make such an order as it considers just. It may depart from the scale prescribed on the rules but should not depart lightly from the ordinary rules of the Court.”
Indemnity costs are clearly a very significant and unusual departure from the usual costs that are ordered in this jurisdiction. The quantum of the order itself may be of such a huge impost that the Court would not order indemnity for that reason. The first two principles are set out in Kohan & Kohan.
The principles set out in the Colgate-Palmolive[8] principles are also relevant and are:
“Are there special or unusual features in a matter and in this case to justify my departure from the norm and order indemnity costs.”
[8] Colgate-Palmolive & Cussons Proprietary Limited (1993) 118 ALR 248; (1993) 46 FCR 225
The finding of special and unusual features are a significant factor in such matters.
The costs order is not of itself of such an amount that I would not order indemnity costs as it would not cause significant financial hardship to the husband. I find it would not.
I find there are special and unusual features in this matter to justify my departure from the norm and order indemnity costs, and they are these.
The husband’s application was doomed to failure. Whether this child played (sport omitted) when with his mother or even played (sport omitted) at all had no impact on his welfare. It had no impact on his welfare in these circumstances, and consistent with the decision in VR & RR[9], which was handed to me by Mr Livingstone, an unreported appeal decision, of the Full Court, I dismissed the husband’s application because I did not see that I should exercise my discretion to make an order in circumstances where whether he did or did not play (sport omitted) had no impact upon his welfare.
[9] VR & RR [2002] FamCA 320
Secondly, the order that the husband sought was initially that when the child was living with his mother, his mother take him to (sport omitted) and games and training and the like and in the alternative that he would take him to the (sport omitted) games when he was meant to be spending time with his mother. That order may have had an impact upon the welfare of the child because he was not spending time with his mother and sister in accordance with the orders as he is used to. However the order the husband sought was that I, in some way, impose upon this mother an obligation to carry out a task she clearly in her affidavit material was against doing. Despite the child having played (sport omitted) previously, she set out clearly in her affidavit how that had come about. Acquiescence at best.
Thirdly, the husband’s financial capacity to pay the cost order I make is a factor for me in whether I order indemnity cost.
Fourthly, the husband’s conduct in threatening the mother by SMS, through various solicitor’s letters with contraventions and breaches of the court order, telling the mother “I will go back to court and let the Court decide” in matters which are clearly matters of parents working things out together, not matters for this Court to determine. It is not the role of this Court, to determine every matter and dispute between the parents. It is for parents to sit down in a respectful, polite, courteous fashion and talk about these matters having their children’s best interest at the forefront of their mind when they do so.
The behaviour of the father and his view that the Court was here to resolve these issues, that the mother could be threatened with contraventions or other such actions by being at a venue or not being a venue, greeting a child or not greeting a child, suggest to me, as the mother put forward in her material, that the father believes he can use this Court in for his personal vendetta or for his personal position. That is not appropriate. This Court is not here to adjudicate every dispute between parents. That is not the Court’s role.
The Court makes orders in the best interests of children, to enable them to benefit from their meaningful relationship with each of their parents and significant others in their life. It is for the parents to parent their children thereafter.
The husband’s attitude to the mother and his attitude to his role as a parent combined with his wealth are the special and unusual circumstances which take this matter out of the ordinary, as I see it, and which has resulted in my determination to order indemnity costs, and I will so order.
However, having said that, I take Mr Parker’s point that the costs that the mother has claimed in her affidavit and annexed to her affidavit, of $22,000, are clearly wrapped up in both the final and in the interim issues. The cost of the preparation of the mother’s affidavit, which goes to interim issues as well as final issues, are as her lawyer submits interwoven. There is a significant difficulty in now unbundling what is relation to interim, what is relation to final.
However, I struggle to accept that in relation to the response and defending of the father’s application for interim orders that the indemnity costs would approach anything like $22,000, given it is really a response and an affidavit to be filed, a counsel’s brief to be prepared and some correspondence to be entered into, even at the cost agreement level that the mother has, which is attached to her material.
In circumstances where I have a wide discretion as to what order I make in relation to costs, I find today that the mother’s indemnity costs ought by paid by the husband in the sum of $15,000.
I certify that the thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Henderson
Date: 20 September 2016
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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